California reaches deal to be first state with $15/hour minimum wage

SACRAMENTO (Reuters) - California Governor Jerry Brown announced a deal with legislators and labor leaders on Monday to raise the minimum wage to $15 an hour by 2023, saying the nation's most-populous state would lead the way toward higher pay for the working poor.

The proposal, which still must win approval from moderate lawmakers, would make California the first to raise the statewide minimum wage to $15 an hour - the highest in the nation - while giving the governor the right to opt out if the economy falters.

Raising the minimum wage has cropped up on many Democratic Party candidates' agendas ahead of the November elections and the issue could help mobilize Democratic voters to the polls.

According to the governor's office, 2.2 million Californians currently earn the state minimum wage of $10 an hour.

The idea of raising the federal minimum wage, which has remained at $7.25 an hour for more than six years, has been opposed by Republicans and some business groups, who say a higher minimum wage would harm small businesses and strain government budgets.

"You've got a Congress that doesn't get it, so out to lunch. I'm hoping that what happens in California will not just stay in California but will be exported to the rest of the country," Brown said at a press conference in Sacramento.

The deal would commit the state, home to one of the world's biggest economies, to raising the minimum wage to $15 an hour by 2022 for large businesses and 2023 for smaller firms.

It would also head off a pair of competing ballot initiatives championed by labor leaders that would raise the minimum wage to $15 an hour by 2021.

But passage of the proposal was not guaranteed without support from more moderate members of the Democrat-controlled legislature. Absent from the press conference was Anthony Rendon, speaker of the state Assembly, where the bill was expected to face opposition.

Democratic presidential hopeful U.S. Senator Bernie Sanders has called for raising the federal minimum wage to $15 an hour by 2020.

Christopher Thornberg, founding partner at Beacon Economics, said increasing the minimum wage was not effective in reducing poverty because the poorest workers were most at risk of losing their jobs when employers cut positions.

"This is not costless," Thornberg said. “These are the people that businesses will say, "If I’m going to pay $15 bucks an hour, I’m not going to hire them.'"

Fourteen states and several cities began 2016 with minimum wage increases, typically phasing in raises that will ultimately take them to between $10 and $15 an hour.